Florida Fares Well In Avoiding Bad Loans

October 27, 1986|By Dick Marlowe of the Sentinel Staff

All things are relative and Central Florida banks are in relatively good shape. Given worldwide economic conditions, these are not the best of days for commercial banks. But, according to a mid-year report of Sheshunoff Rating Services, Florida and Central Florida banks look healthy when compared with their counterparts in most of the nation.

A decrease in earnings is nothing to brag about -- but the .28 percent decrease in combined earnings in the first half of 1986 for Florida's 411 banks looks pretty good when compared with a 2.56 percent decrease in earnings for the nation's 14,248 banks.

Banks have been failing at a scary pace for the past two years, but Florida has been spared any major disaster. To date, troubled Florida banks have been quickly gobbled up by other banks wanting into the territory.

Most banks, of course, fail because of bad loans. Bankers don't like to admit that they occassionally make bad loans, so they show up on the annual report as ''non-performing loans.''

Whatever it is called, a non-performing loan is one that is 90 days past due. Not all of them are always charged off as total losers, but a high percentage of non-performing loans is a pretty big tip-off that the bank is in trouble.

Florida also looks pretty good in that regard. Only 1.84 percent of loans by Florida banks are non-performing, compared with 2.87 percent for the nation at large. Things look even better in Central Florida. In Orange County, only .70 percent of the commercial bank loans are in the non-performing category; and in Seminole County, just .52 percent.

better in Central Florida. In Orange County, only .70 percent of the commercial bank loans are in the non-performing category; and in Seminole County, just .52 percent.

Osceola County bankers must be either the best or more conservative of all, because non-performing loans as a percentage of gross loans is only .02 percent. With $28.2 million in total loans, that is about the equivalent of a delinquent car loan.

Lake County had a non-performing loan ratio of .51 percent; Polk County, 1.11 percent; and Marion County, 2.31 percent. But a low non-performing loan ratio cannot be totally attributed to good banking. A healthy economy usually means healthy bank loans, and Central Florida has been particularly blessed in that regard.

Brevard County, hit hard by the space shuttle disaster, is beginning to show economic weakness through its troubled loans. The county that is home to Kennedy Space Center has a 4.24 percent non-performing bank loan ratio.

Most Dade County banks, despite a glut of luxury condominiums and a general overbuild, have avoided first-degree burns. Dade shows a relatively stable 2.21 percent ratio of non-performing loans.

In the Tampa Bay area, Pinellas County bankers apparently have been picking up loans that Hillsborough County turned down. Pinellas banks have an embarrasing 5.22 percent ratio of non-performing loans; compared with a healthy 1.13 percent in neighboring Hillsborough County.

While the non-performing loans do, in fact, indicate problems with the area economy, banks do not always stay within the confines of the county they serve to make loans. There is not that much difference between the economic conditions in Pinellas and Hillsborough counties.

On nationwide comparisons, you can pretty well spot the states that have been hit by farm, energy and real estate problems by checking the volume of non-performing loans.

As noted by Alex Sheshunoff, president of the Austin, Texas-based company, non-performing loans ''clearly indicated the magnitude of the problems in the state's economy.''

Wyoming, hit both by agricultural- and energy-loan problems, has the worst scenario -- 7.35 percent of all bank loans falling into the non- performing sector.

Florida banks rank 18th on the list of non-performing loans as a percent of total loans. The healthiest banks in the nation are in North Carolina, where the non-performing loans are only at .82 percent.

The Sheshunoff report confirms that the Atlantic Coast states from Maine to Florida are experiencing strong loan growth with good quality; and that the Southwest is running into slow to negative loan growth, with increasing non- performing loans. Even the once-mighty, oil-rich state of Texas has a non- performing loan ratio of 4.51 percent -- well above the national average.